A Brielle man was arraigned Wednesday in U.S. District Court in Trenton following his indictment in June on charges that he engaged in an insider trading scheme with a friend who worked at a Canadian asset management firm, garnering some $3.4 million in illicit trading profits.
Christopher Matthaei, 44, was a partner at a Charlotte, North Carolina-based broker-dealer that had an office in Red Bank.
He is accused of using confidential information obtained from his friend to invest in Special Purpose Acqusition Companies (SPACs) from May 2020 through February 2021. The friend, Sean Wygovsky, a portfolio manager,securities analyst and trader at the unnamed Canadian asset management firm, tipped Matthei to upcoming mergers that Wygovsky learned of through his firm, a potential investor in several SPAC deal, according to the U.S. Securities and Exchange Commission.
SPACs are shell companies started solely to raise capital through an initial public offering to buy or merge with an existing company.
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Wygovsky passed along some of the information through the encrypted app Telegram, the government alleges.
Among the companies involved with the mergers that Matthei profited from were Hyliion Inc., which makes electric powertrains for commercial vehicles; Rush Street Interactive LP, an online casino and sports betting company; Archer Aviation Inc., which makes electric vertical takeoff and landing aircraft; and a Origin Materials Inc., which produces material that removes carbon from the atmosphere, according the SEC.
Matthei is alleged to have purchased 5,000 shares of Hyliion on May 29, 2020, a morning after receiving a tip from Wygovsky, according to the indictment. Three days later, seven minutes after receiving a call and a tip from Wygovsky, Matthei purchased another 5,000 shares, the indictment alleges
Matthei is alleged to have made $1,489,026 in profits on the Hyliion trades.
In all, he is alleged to have purchased some 55,000 shares in six companies involved in the SPAC deals for which Wygovsky shared restricted information, netting Matthei $3.4 million.
But Matthei's attorney, Michael J. Tuteur of Boston, said Matthei is an innocent man.
"We are dismayed that the government has chosen to bring baseless charges against Mr. Matthaei based on the serial fabrications of Sean Wygovsky, a convicted securities con artist looking to cut a deal to save his own skin," Tuteur said in a statement. "Mr. Matthaei is a smart and deeply knowledgeable securities trader who acted honestly and appropriately at all times, and the evidence will show that these charges should never have been brought."
Wygovsky pleaded guilty in the case to an information charging him with securities fraud. Sentencing is scheduled for Nov. 5.
Matthei is facing nine counts: two counts of securities fraud conspiracy and seven counts of securities fraud.
Matthei faces a maximum penalty on each of two counts of 25 years in prison and a $250,000 fine and 20 years in prison and a $5 million fine on each of five counts. The other two counts are lesser charges.
Ken Serrano covers breaking news, crime and investigations. Reach him at 732-643-4029 or kserrano@gannettnj.com.
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